All Carillion's victims

 & the risks of speaking up!

AFTER a year the fall of Carillion is still having consequences with many sub-contractors having lost huge amounts.  Today in Construction News Rob Davies spoke with some of those affected to find out why:

In the aftermath of Carillion’s failure, there were concerns that its liquidation would lead to multiple collapses in the contractor’s supply chain.

Rob Davis writes:
'Carillion’s construction arm was estimated to have liabilities of close to £7bn when it went bust last year; it owed £1.9bn to creditors at the end of 2016 according to its last published set of accounts. The contractor was known to have 30,000 suppliers.
'Publicly though, some of those worst affected sought to downplay their exposure to Carillion, with very few construction companies revealing their losses.
'But behind closed doors, clients and principal contractors were conducting wide-scale supply chain interrogations targeting partners they either knew of or suspected had worked with Carillion.'

Mr. Davis continues:
'Credit referencing agencies, used by businesses to assess the risk profile of potential suppliers, also went into overdrive, compiling lists of all the companies they believed could be next to go under.'

  Death knell reported by Construction News:

ANY company that was identified by more than one of these agencies struggled to get its payments insured beyond a week at a time.
 
Multiple contractors have told Construction News how they felt gagged from speaking out as a victim of Carillion both to clients and the wider public as doing so could effectively sound a death knell for their business.

Unions accuse Government of failing to learn lessons

Equally on the anniversary of Carillion's collapse trade unions have accused the government of failing to learn lessons from the collapse of Carillion, instead pumping even more money into outsourcing companies, a year on from the firm’s high-profile demise.

The lifetime value of outsourcing contracts awarded in 2017-18 “rocketed” by 53% from £62bn to £95bn in the past year, according to the GMB union, which pointed to nearly £2bn in contracts awarded to Capita and Interserve despite both issuing profit warnings.

The GMB said this showed a government “hell-bent” on privatisation, despite the warning signs given by the collapse of Carillion, which managed public sector contracts to provide services such as prison maintenance and school dinners.

Unite union critises lack of action

Unite, Britain’s largest trade union, bemoaned a lack of action taken against former Carillion directors, who were accused by a committee of MPs of “recklessness, hubris and greed”, reiterating calls for a criminal investigation.

The Unite assistant general secretary, Gail Cartmail, said: 'It is staggering that a year after the biggest corporate failure in modern UK history the government has carried on as though it is business as normal.

'The fact that no one involved in Carillion has yet had any form of action taken against them, demonstrates either that the regulators are failing to do their jobs or that existing laws are too weak.  If it is the latter then we need better, stronger laws.

 'A year on from Carillion’s collapse the government needs to stop prevaricating and start taking effective action to drive bandit capitalism out of the UK.'


The government has introduced measures to make companies in charge of major public sector contracts draw up “living wills” to ensure the smooth operation of the services they provide in the event of financial failure.

But Unite said the measures did not go far enough to reform the system of public procurement.
A spokeswoman for the Cabinet Office, which manages the outsourcing of public sector contracts and faced criticism over its role in the administration of the bust of Carillion, said the government had put in place measures to prevent a repeat.

She said:  'This government has taken great strides to improve how we work with the private sector, including requiring companies to demonstrate prompt payment to suppliers and piloting "living wills" for critical contracts, allowing contingency plans to be quickly put into place if needed.'

The accounting watchdog Financial Reporting Council (FRC), which was criticised by MPs for being 'chronically passive' over the audits of Carillion by firms including KPMG, is still investigating the circumstances of its failure.

The Insolvency Service, an arm of the department for business, energy and industrial strategy, is also investigating the affair and began interviewing former directors of the company last year.

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